The cost to close a limited company depends on whether the company is solvent or insolvent. If you’re insolvent and need to close a company that has debts, the cost is £2,995 plus vat.
If you’re company is solvent and you want to close your company tax efficiently it can be considerably cheaper, at a cost of £995 plus vat. There are additional costs too like disbursements and statutory bonds for each, which usually amount to around £300 but this depends on the debt/asset value.
It’s important to note that if you can use business asset disposal relief then the reduction in tax to 10% will more than cover the cost of using an insolvency practitioner
Clarke Bell can provide an exact quote once we understand the financial situation of the company, how many shareholders or creditors are involved and the total value of assets owned.
If you have decided it is the right time to close a limited company, there are many things to take into consideration.
From whether your company is solvent or insolvent. How you should close the limited company to what costs you will incur. Company directors have a lot to think about.
To help, Clarke Bell have put together this article explaining how much it costs to close a limited company and what the process involves, to help make the process that little bit easier.
When looking at how to close a limited company you will first need to establish whether the business is solvent or insolvent.
How to close a limited company that is solvent
If the company is solvent (i.e. it can pay all of its debts / it has no debts) and it has assets in excess of £25,000, the best way to close it is typically with a Members’ Voluntary Liquidation due to the tax benefits.
We can help close your limited company efficiently
Members’ Voluntary Liquidation (MVL)
An MVL is a voluntary process that winds-up a solvent company.
This is a process that is initiated by company directors at a time that is right for them and the business.
It might be the case that the director is looking to retire, take a step back within the company and move to a PAYE role (perhaps due to the IR35 / Off Payroll rule changes) or they are looking to discontinue part of their business.
A licensed Insolvency Practitioner must be appointed to oversee and carry out the process.
A Members’ Voluntary Liquidation is a popular option for directors of solvent companies as it is a tax-efficient way of winding-up a business. This is due to the fact that when closing a company through a Members’ Voluntary Liquidation, any funds taken out are subject to Capital Gains Tax rather than Income Tax, which is set at just 10%.
This is significantly less than the level of income tax you would otherwise be charged which sits at 18% for the basic level and 28% for the higher level.
There are also further advantages for directors who qualify for Business Asset Disposal Relief (formerly known as Entrepreneurs’ Relief) which means you can sell all or part of the company and pay just 10% in Capital Gains Tax on profits over the lifetime of your business up to a limit of £1 million. This can save directors a huge amount on their tax bill.
How much does it cost to close a limited company through an MVL?
At Clarke Bell, we have a range of categories for our Members’ Voluntary Liquidation service, meaning we can help you close down your solvent company with an MVL, whatever your situation is.
Our prices are affordable and we make the distributions to shareholders quickly.
The cost of an MVL starts from just £995 +VAT +disbursements.
How to close a limited company that is insolvent
However, if your company is insolvent (i.e. it cannot pay its debts) then a different set of options will be open to you, including Creditors’ Voluntary Liquidation (CVL.)
Creditors’ Voluntary Liquidation (CVL)
Although a CVL occurs when a company is insolvent, it is still a completely voluntary form of liquidation.
This is an option open only to insolvent companies – i.e. which have more liabilities than assets or can no longer afford to cover their daily costs or pay their debts.
Although this process ends up in the company being liquidated and dissolved, there are many benefits for both directors and creditors using a CVL.
This is a good option for businesses that no longer believe they have a sustainable future and the best option will be to close. This is a way for company directors to take control of the situation and act before things get any worse.
Opting for Creditors’ Voluntary Liquidation also means you can avoid being forced into compulsory liquidation, the most serious form of liquidation.
What’s more, as it is a voluntary process, directors who want to put their company into Creditors’ Voluntary Liquidation are free to choose which Insolvency Practitioner they appoint.
With this option, the director can close the company and always has the option to open another business in the future if they wish. Finally, their personal finances won’t be impacted.
How much does it cost to close a limited company through a CVL?
At Clarke Bell we are conscious of the way in which insolvency costs can spiral out of control. We have committed ourselves to working to fees based upon a combination of a fixed fee and a percentage of realisations, and we offer 2 different pricing structure for CVLs depending on the individual situation.
Our CVL fee cost is from only £2,995 (+VAT +disbursements).
If the liquidation is a complicated one, then the price is determined on a case-by-case basis.
In some cases, the cost of the liquidation can be met from the value of assets sold. We will advise you if this is possible in your case.
Ready to take the next steps? Get in touch with Clarke Bell today
Whether you are considering closing your limited company either through a CVL or MVL, Clark Bell is here to help you.
Our team of friendly experts will work closely with you to take care of everything, giving you peace of mind. What’s more, we offer nationwide, remote services, meaning you can easily close your company from the comfort of your own home or office.
To see how we can help you close your company, at a very affordable price, simply get in touch with our team now.